US imposes critical round of nuclear sanctions on Iran

On November 4th, 2018, the United States has reimposed another batch of nuclear-related sanctions on Iran. Such measures are set to affect Iran’s energy, shipping, and banking sectors, and they will have impact both within and outside the US.

Six months after announcing its withdrawal from the Iran Nuclear Deal, the United States has reimposed a second set of nuclear-related sanctions on the Islamic Republic of Iran. Such sanctions – US Special Representative for Iran Mr. Brian Hook explains – “are the toughest sanctions on the Iranian regime that have ever been imposed,” and their aim is to bring about a decisive change in the behavior of the country.

Following its withdrawal in May 2018, the US had already imposed a first round of sanctions in August. However, this latest set of sanctions, which entered into force on November 4th, constitutes a decisive increase in the pressure applied on Iran.

While the first set of restrictive measures were limited to the trade in goods such as carpets and commercial aviation parts, the latest measures are set to hit critical sectors of the Iranian economy, such as oil exports, shipping, insurance services, as well as the country’s financial and baking sector. However – Special Representative Hook noted – trade in food and medical goods with non-designated entities will be exempted from the sanctions.

Talking to the press from Washington, Mr. Hook stressed that the aim of these measures is “to diminish the regime’s capacity to fund its broad range of threats to peace and security,” and to eventually push the Iranians back to the negotiating table. Mr. Hook reiterated that the US is open to negotiations with Iran, but clarified that such negotiations should address the whole range of Iran’s malign activities, and not only its nuclear programme.

The US sanctions regime – Special Representative Hook noted – have already taken their toll on the Iranian economy. According to the State Department, over the last six months more than 100 major world companies have withdrawn from Iran, causing tens of billions of dollars in lost investments, and more than 20 countries have reduced to zero their imports of crude oil from Iran, causing more than USD 2 billion of lost revenue for the Iranian government.

Eight countries have been temporarily exempted from the oil-related sanctions – Mr. Hook explained – in order to avoid major increases in global oil prices. While declining to comment on the terms of such exemptions, the Special Representative stressed that three of these countries are already on their way to reduce to zero their imports of Iranian crude.

While being praised by some US allies such as Israel, the reimposition of sanctions on Iran has generated some disagreements between the US and its European allies, with the latter repeatedly stressing their commitment to preserve the JCPOA. Commenting on the issue, Special Representative Hook reiterated that, in spite of some diverging opinions on the JCPOA, the US and the EU share the same threat assessment of Iran, but that each country has the right to make its own decisions in its sovereign capacity.

Nevertheless, as US sanctions have extraterritorial nature, European companies dealing with Iran do face the threat of US punishment. In an attempt to preserve the deal, the EU has been trying to implement mechanisms to bypass US sanctions, for example by means of the so-called Special Purpose Vehicle. However, Mr. Hook claimed that such mechanisms do not seem to enjoy a wide demand among European companies, as Iran’s economy is per se not much attractive for businesses. Moreover, the Special Representative stressed that the US will not hesitate in sanctioning any individual or entity that will contravene its sanctions regime.

As the US seems more convinced than ever to apply a strong pressure on Iran, the whole world closely follows the developments and waits to see how the US-Iran confrontation will evolve in the future.